FINANCIAL CRIME NEWS
COMMODITIES and DERIVATIVES NEWS STORIES
By Stephanie Ayres
27 November 2006
Raleigh, North Carolina
The Commodity Futures Trading Commission (CFTC) announced on July 25 that a default judgment and permanent injunction has been entered in its civil case against John Poole of Pfafftown, North Carolina, who also used the name James Drew. Poole/Drew marketed an allegedly fraudulent commodity options trading program called Mac Systems through a website called “optionstoriches.com” which promised customers would make “a ton of cash” with its use.
The judgment calls for Poole/Drew to pay a $240,000 civil penalty. He will be permanently barred from participating in businesses involving commodity futures or options trading.
By Stephanie Ayres
2 October 2006
West Palm Beach, Florida
The Commodity Futures Trading Commission (CFTC) announced on July 19 that a final judgment has been entered in its case against Jupiter, Florida-based Wilshire Investment Management Corporation and its CEO Andrew Alan Wilshire.
Both were held responsible, along with Wilshire’s guarantor company, National Commodities Corporation of Fort Lauderdale, for the allegedly fraudulent sales practices of Wilshire Investment Management salesmen in promoting the company’s options trading program to public investors. Some sales pitches by Wilshire promoters were said to claim that customers could turn their $5,000 or $10,000 investments into $100,000 with options trading, but the CFTC had claimed that these promotions used unrealistic claims about the potential for profit and the amount of risk involved. They also were said to have not disclosed to potential customers that about 88% of the firm’s existing customers had lost money trading options with Wilshire between 2000 and 2004.
The settlement reported by the CFTC includes a $100,000 civil penalty assessed to Wilshire, for which National Commodities Corporation is jointly liable. Andrew Wilshire and two salesmen – Eric Scott Malcolmson of Tequesta and James Joseph Russo of Palm Beach Gardens – are permanently barred from the commodities industry and were assessed penalties of $100,000 and ordered to pay $147,892 of restitution to clients.
By Stephanie Ayres
2 October 2006
Miami, Florida
The Commodity Futures Trading Commission (CFTC) announced on July 19 that former forex promoters Melvin Webman and Larry Webman have settled a CFTC civil case brought against them in May 2005 for an alleged multi-million-dollar fraud against customers of two companies controlled by the Webmans – International Forex Advisory Group and Worldwide Currencies Corporation.
The settlement announced in July provides for the Webmans to pay $2,957,912 of restitution. Both are to pay a $500,000 civil penalty. A default judgment in November 2005 ordered International Forex Advisory Group to pay $2,701,960 of restitution and a civil penalty of $3,178,640 while World Currencies Corporation was ordered to pay $255,952 of restitution and a civil penalty of $526,470.
By Stephanie Ayres
28 September 2006
Cleveland, Ohio
The Commodity Futures Trading Commission (CFTC) announced on July 13 that a final judgment has been entered in its civil case against Bay Village, Ohio-based Carnegie Trading Group Ltd Inc and its principal, John Glase. The judgment found Carnegie Trading and Glase responsible for marketing and sales abuses on the part of salesmen promoting Carnegie Trading’s futures program to public investors.
Salespeople, including former Carnegie agents John Hollenbaugh and Reid Henshaw, allegedly claimed that customers could receive risk-free profits ranging from 150% to 200% within weeks, but failed to tell these customers that at least three-fourths of Carnegie’s existing customers had lost money on their trading.
The judgment announced by the CFTC calls for Carnegie Trading and Glase to disgorge $32,850 of profits and pay $229,971 of restitution and $98,500 in penalties. Hollenbaugh and Henshaw were also named in the CFTC case. Both settled before it went to trial. In addition, permanent injunctions against future violations of the Commodity Exchange Act were entered for both, and the former salesmen are subject to the Carnegie restitution order and were also assessed civil penalties of $50,000 (Hollenbaugh) and $75,000 (Henshaw).
By Stephanie Ayres
8 September 2006
Fort Lauderdale, Florida
The Commodity Futures Trading Commission (CFTC) announced on June 27 that a final judgment has been entered in its case against the operators of a South Florida entity called Gibraltar Monetary Corporation which had been accused of soliciting for a fraudulent foreign currency options scheme to be carried out through a New York dealer, Forex Capital Markets LLC.
Gibraltar Monetary president Jayson Kline of Boca Raton, vice president Charles Fremer of Coral Springs, and senior account executive Edward Johnson of Wellington were found to have misrepresented the chances that investors would profit without telling them that about 95% of Gibraltar customers were losing most of their investment. They also failed to disclose that Kline had been ordered to cease and desist promotion of a fraudulent commodity options scheme by the CFTC in December 1993. In the 2006 case, he was found to be a control person of Gibraltar who had violated the 1993 order.
Former Gibraltar compliance manager Thomas Clancey of Sunrise, Florida reportedly settled wtih the CFTC before the Gibraltar Moonetary trial and testified on behalf of the CFTC in the case. The judgment against the three other defendants includes joint responsibiity for $2,752,337 of restitution and a total of $783,378 in civil penalties. Kline, Fremer, and Johnson are also barred from future commodity-related activity.
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